Paycom Software, Inc. (PAYC)
Fair ValueFundamental
76
Price
$217.65
Market Cap
$9.95B
Part 1 · What the company is worth
Overview
Paycom sells a single cloud-based software platform that handles payroll, HR, benefits, timekeeping and talent management for mid-sized US businesses, replacing the mix of spreadsheets, outsourced payroll bureaus and separate HR tools many companies use. Its distinctive feature is Beti, which has employees themselves review and submit their own payroll each cycle rather than leaving that work to a company's HR department. It sells directly to employers through its own sales force rather than through resellers.
How it makes money
Nearly all revenue is recurring: clients pay a per-employee, per-payroll-run fee for continued access to the software, which Paycom collects automatically each time a client runs payroll, giving the business a subscription-like cadence without a fixed monthly contract. A small remainder comes from one-time implementation fees charged when a new client is set up on the platform. Clients can cancel with 30 days' notice, so revenue depends on retaining employer headcount and clients rather than on multi-year lock-in.
Revenue by segment
Per-employee, per-payroll-run software fees paid by clients each time they process payroll on the platform.
One-time fees charged to set up and onboard a new client onto the Paycom platform.
What drives demand
Moderately cyclicalRevenue tracks the number of employees processed through client payrolls, so it softens when clients lay off staff in a downturn even without losing a single client. Growth otherwise depends on winning new employers away from competitors and outsourced payroll providers in a market the company itself describes as highly competitive, and where moving upmarket to larger customers puts it against a wider set of rivals.
Key risks
- Intense competition and pricing — The HCM software market is highly competitive, and Paycom's offering is more expensive than many competitors'; moving upmarket to larger customers puts it against a wider set of rivals and can pressure margins.
- Client retention with short notice periods — Clients can terminate their agreements with just 30 days' notice, which introduces volatility in the company's annual revenue retention rate and makes results sensitive to client satisfaction and pricing competition.
- Beti reducing billable corrections — Beti's design, having employees catch and fix payroll errors themselves before submission, reduces payroll errors but can also reduce revenue the company previously earned from billable correction work.
- Cybersecurity and data breaches — Security vulnerabilities, cyberattacks or data breaches could cause clients to reduce or stop using the platform, harm the ability to attract new clients, and expose the company to significant liability and privacy-law penalties.
Written by the editors, published on August 18, 2026
Direct competitors
Who this company fights with for the same customers
Generated on September 19, 2026 with claude-haiku-4-5 — shared with all users
Paylocity sells the same single-database cloud payroll and HR platform to the same US small and mid-sized employers Paycom targets, and the two meet head-to-head in most competitive deals.
ADP is the largest US payroll and human capital management provider and competes with Paycom across every employer size band, from small businesses to large enterprises.
Paychex serves the same small and mid-sized US employers with payroll, benefits and HR outsourcing, and strengthened that overlap by acquiring mid-market rival Paycor.
Workday competes for the larger end of Paycom's client base, where employers choose between the two for cloud HR, payroll and talent management.
Dayforce offers a comparable unified cloud platform for payroll, time and workforce management to mid-market and enterprise employers; it is named by Paycom in its 10-K and is now privately held by Thoma Bravo.
UKG, privately held after the merger of Ultimate Software and Kronos, sells payroll and workforce management software to the same mid-market and enterprise US employers.
Balance Sheet & Liquidity
Revenue
$2.14B
Trailing 12 months (through 6/30/2026)
Net Income
$488M
Trailing 12 months (through 6/30/2026)
Free Cash Flow
$408M
Total Equity
$1.73B
Total Liabilities
$5.87B
Current Ratio
1.07
Interest Coverage
39.79
Debt/EBITDA
1.32
Earnings Per Share
Revenue & Net Income
Free Cash Flow
Income Breakdown
Historical statement
Margins over time
Debt over time
How heavy the debt is
Growth grid
Growth — Revenue
Fair Value Estimation
Fair Value
$289.29
Current Price
$217.65
Margin of Safety
+24.8%
Fair Value Range
$188.04 - $390.54
Spread across the valuation methods used, not a statistically calibrated confidence interval.
Estimation Methods
Valuation Metrics
P/E Ratio
23.15
ROE
26.2%
P/B Ratio
17.17
P/FCF
17.06
Gross Margin
83.7%
ROIC
26.2%
Profitability Radar
Value Creation (Economic Moat)
ROIC
26.2%
WACC
8.1%
ROIC − WACC
+18.1 pp
ROIC exceeds the cost of capital — the company is creating value for shareholders.
Fundamental Analysis Criteria
Passed (21)
- EPS shows upward trend
- Price CAGR 17.16%
- ROIC 26.1%
- Gross Margin 83.7%
- P/FCF 17.06
- Debt/Equity ratio
- Operating Margin 30.3%
- Positive Free Cash Flow
- Current Ratio
- Interest Coverage
- Debt/EBITDA
- Return on Tangible Assets
- Low reliance on intangibles
- ROE 40.4%
- Revenue Growth 5Y 19.5%
- Earnings Surprise avg 3.5%
- PEG Ratio 0.75
- Earnings Quality (OCF/NI) 1.64
- Share Dilution -0.3%
- Net Margin Trend 22.8% vs 21.2%
- Piotroski F-Score 5/9
Failed (5)
- P/B Ratio 17.17
- CapEx intensity
- Price below Graham Number
- DCF valuation (Overvalued)
- Analyst Consensus 44% Buy
Unavailable (1)
- Dividend Payout NaN%
Piotroski F-Score
Mixed signals: some areas need attention
Earnings Quality
High quality: earnings backed by cash
Share Dilution
Buying back shares. Shareholder friendly
Institutional Holdings
Governance
Executive Team
| Name | Title | Age |
|---|---|---|
| Mr. Chad R. Richison | Founder, CEO & Chairman of the Board | 55 |
| Mr. Terrell Hadlock | President & Chief Client Officer | 50 |
| Mr. Robert D. Foster | Chief Financial Officer | 63 |
| Mr. Randy Peck | Chief Operating Officer | 59 |
| Mr. James Samford | Head of Investor Relations | - |
| Mr. Matthew Paque J.D. | Chief Legal Officer & Secretary | - |
| Mr. Jeffrey D. York | Chief Sales Officer | 58 |
| Ms. Jennifer M. Kraszewski | Chief Human Resources Officer | - |
Audit Risk
1
Board Risk
9
Compensation Risk
9
Shareholder Rights Risk
5
Part 2 · The price and when to enter
This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.
Documents
- View document
Annual Report (10-K)
A yearly overview of the business, its financial results, and the risks it faces.
Filed on 2026-02-19
- View document
Quarterly Report (10-Q)
A snapshot of financial performance for the most recent three-month period.
Filed on 2026-08-06
- View document
Current Report (8-K)
An announcement of a major event, such as a leadership change or big news.
Filed on 2026-08-05
via SEC EDGAR
Income History
via SEC EDGAR
Latest News
Recent headlines for PAYC, sourced from Markets Gazette.
- 3/6/2026NEUTRALWhere Paycom Software Stands With Analysts
Paycom Software Inc. (PAYC) received mixed analyst ratings in February 2022. Needham maintained a 'Buy' rating, while Piper Sandler kept an 'Overweight' rating. However, Mizuho maintained a 'Neutral' stance. This divergence suggests analysts have differing views on the company's near-term prospects, with some seeing upside potential while others remain cautious. Investors should note these varied perspectives when considering their investment in PAYC.
via Markets Gazette